NATIONAL
      HOLDING CORPORATION

    120
      Broadway, 27th
      Floor

    New
      York,
      NY
      10271

    July
      1,
      2008

    Mark
      Goldwasser

    120
      Broadway, 27th
      Floor

    New
      York,
      New York 10271

    


    Dear
      Mark: 

    


      We
      are
      pleased to inform you that National Holdings Corporation (the “Company”), has
      granted you a nonqualified option (the “Option”) to purchase the 1,000,000
      shares of the Company’s common stock, par value $.02 per share (the “Common
      Stock”), at a purchase price of $1.64 per share (any of the underlying shares of
      Common Stock to be issued upon exercise of the Option are referred to
      hereinafter as the “Shares”). Capitalized terms used and not otherwise defined
      herein shall have the meanings ascribed to them in the employment agreement
      of
      even date herewith between you and the Company (“Employment
      Agreement”).

    


    1. Subject
      to the terms hereof, the Option may be exercised on or prior to June 30, 2015
      (after which date the Option will, to the extent not previously exercised,
      expire). The Option shall vest and become exercisable as to 25% of the Shares
      on
      and after each of July 1, 2008, 2009, 2010 and 2011, provided you are then
      still
      employed by of the Company. 

    


        2. The
      Option, from and after the date it vests and becomes exercisable pursuant to
      Section 1 hereof, may be exercised in whole or in part by delivering to the
      Company a written notice of exercise in the form attached hereto as
      Exhibit 1 (or such other form approved by the Company), specifying the
      number of the Shares to be purchased and the purchase price therefor, together
      with payment of the purchase price of the Shares to be purchased. The purchase
      price is to be paid in cash or by delivering shares of Common Stock already
      owned by you for at least six months and having a Fair Market Value on the
      date
      of exercise equal to the purchase price of the Option being exercised, or a
      combination of such shares and cash. Fair Market Value, unless otherwise
      required by any applicable provision of the Internal Revenue Code of 1986,
      as
      amended from time to time, and any successor thereto and the regulations
      promulgated thereunder, means, as of any given date: (i) if the Common Stock
      is
      listed on a national securities exchange or quoted on the Nasdaq Global Select,
      Global or Capital Markets (collectively, the “Nasdaq Markets”), the last sale
      price of the Common Stock in the principal trading market for the Common Stock
      on the last trading day on or before such date, as reported by the exchange
      or
      Nasdaq, as the case may be; (ii) if the Common Stock is not listed on a national
      securities exchange or quoted on any of the Nasdaq Markets, but is traded in
      the
      over-the-counter market, the last sale price for the Common Stock on the last
      trading day on or before such date for which such quotations are reported by
      the
      OTC Bulletin Board or the National Quotation Bureau, Incorporated or similar
      publisher of such quotations; and (iii) if the fair market value of the Common
      Stock cannot be determined pursuant to clause (i) or (ii) above, such price
      as
      the Compensation Committee of the Company shall determine, in good
      faith.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

              In
      addition, payment of the purchase price of the Shares to be purchased may also
      be made by delivering a properly executed notice to the Company, together with
      a
      copy of the irrevocable instructions to a broker to deliver promptly to the
      Company the amount of sale or loan proceeds necessary to pay the purchase price,
      and, if required, the amount of any federal, state or local withholding taxes.
      

    


              No
      Shares shall be issued until full payment therefor has been made. You shall
      have
      all of the rights of a shareholder of the Company holding the Common Stock
      that
      is subject to the Option (including, if applicable, the right to vote the Shares
      and the right to receive dividends thereon), when you have given written notice
      of exercise, have paid in full for such Shares and, if requested, have given
      the
      certificate described in Section 9 hereof. 

    


    3.
      The
      Option shall immediately vest and become exercisable as to all of the Shares
      pursuant to the terms and conditions of the Employment Agreement. 

    


        4. In
      the
      event your employment with the Company is terminated, the Option shall forthwith
      terminate, provided that you may exercise any then unexercised portion of the
      Option then vested and exercisable pursuant to Section 1 hereof at any time
      prior to the earlier of nine months after such date, or the expiration of the
      Option. 

    


        5. The
      Option is not transferable except (i) by will or the applicable laws of
      descent and distribution or (ii) for transfers to your family members or
      trusts or other entities whose beneficiaries are your family members, provided
      that such transfer is being made for estate, tax and/or personal planning
      purposes and will not have adverse tax consequences to the Company. In such
      event, the transferee shall remain subject to all the terms and conditions
      applicable to the Option prior to such transfer. 

    


        6. In
      the event of your death or Disability, the Option may be exercised by your
      personal representative or representatives, or by the person or persons to
      whom
      your rights under the Option shall pass by will or by the applicable laws of
      descent and distribution, within the nine-month period following termination
      due
      to death or Disability. 

    


        7. In
      the
      event of any change in the shares of Common Stock of the Company as a whole
      occurring as the result of a stock split, reverse stock split, stock dividend
      payable on shares of Common Stock, combination or exchange of shares, or other
      extraordinary or unusual event occurring after the date hereof, the Board of
      Directors of the Company (“Board”), or a committee thereof shall make
      appropriate adjustments in the terms of the Option to preserve the economic
      interest of the grant. Any such adjustments will be made by the Board, or a
      committee thereof, whose determination will be final, binding and conclusive.
      

     

    
      
        
        

      

      
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    8. 
      The
      grant of the Option does not confer on you any right to continue in the employ
      of the Company or any of its subsidiaries or affiliates or interfere in any
      way
      with the right of the Company or its subsidiaries or affiliates to terminate
      the
      term of your employment.

    


        9.
      The
      Company shall require as a condition to the exercise of any portion of the
      Option that you pay to the Company, or make other arrangements regarding the
      payment of, any federal state or local taxes required by law to be withheld
      as a
      result of such exercise. 

    


        10. Unless
      at
      the time of the exercise of any portion of the Option a registration statement
      under the Securities Act of 1933, as amended (the “Act”), is in effect as to the
      Shares, the Shares shall be acquired for investment and not for sale or
      distribution, and if the Company so requests, upon any exercise of the Option,
      in whole or in part, you agree to execute and deliver to the Company a
      reasonable certificate to such effect. 

    


        11.
      You
      understand and acknowledge that: (i) any Shares purchased by you upon
      exercise of the Option may be required to be held indefinitely unless such
      Shares are subsequently registered under the Act or an exemption from such
      registration is available; (ii) any sales of such Shares made in reliance
      upon Rule 144 promulgated under the Act may be made only in accordance with
      the terms and conditions of that Rule (which, under certain circumstances,
      restrict the number of shares which may be sold and the manner in which shares
      may be sold); (iii) certificates for Shares to be issued to you hereunder
      shall bear a legend to the effect that the Shares have not been registered
      under
      the Act and that the Shares may not be sold, hypothecated or otherwise
      transferred in the absence of an effective registration statement under the
      Act
      relating thereto or an opinion of counsel satisfactory to the Company that
      such
      registration is not required; (iv) the Company shall place an appropriate
“stop transfer” order with its transfer agent with respect to such Shares; and
      (v) you shall abide by all of the Company’s policies in effect at the time
      you acquire any Shares and thereafter, including the Company’s Insider Trading
      Policy, with respect to the ownership and trading of the Company’s securities.


      

    12. The
      Company shall use commercially reasonable to file and keep in effect a
      Registration Statement on Form S-8 registering under the Act the Shares issuable
      to you upon exercise of the Option. 

     

    
      
        
        

      

      
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    13. The
      Company represents and warrants to you as follows: (i) this agreement and
      the grant of the Option hereunder have been authorized by all necessary
      corporate action by the Company and this agreement is a valid and binding
      agreement of the Company enforceable against the Company in accordance with
      its
      terms; (ii) the grant of the Option to you on the terms set forth herein
      will be exempt from the provisions of Section 16(b) of the Exchange Act pursuant
      to Rule 16b-3(d) thereunder; (iii) the Company will obtain, at its
      expense, any regulatory approvals necessary or advisable in connection with
      the
      grant of the Option or the issuance of the Shares; and (iv) the Company
      currently has reserved and available, and will continue to have reserved and
      available during the term of the Option, sufficient authorized and issued shares
      of its Common Stock for issuance upon exercise of the Option. 

    


    14.
      This
      agreement and the Employment Agreement contain all the understandings between
      the Company and you pertaining to the matters referred to herein, and supersedes
      all undertakings and agreements, whether oral or in writing, previously entered
      into by the Company and you with respect hereto. No provision of this agreement
      may be amended or waived unless such amendment or waiver is agreed to in writing
      signed by you and a duly authorized officer of the Company. No waiver by the
      Company or you of any breach by the other party hereto of any condition or
      provision of this agreement to be performed by such other party shall be deemed
      a waiver of a similar or dissimilar condition or provision at the same time,
      any
      prior time or any subsequent time. If any provision of this agreement or the
      application of any such provision to any party or circumstances shall be
      determined by any court of competent jurisdiction to be invalid and
      unenforceable to any extent, the remainder of this agreement or the application
      of such provision to such person or circumstances other than those to which
      it
      is so determined to be invalid and unenforceable, shall not be affected thereby,
      and each provision hereof shall be validated and shall be enforced to the
      fullest extent permitted by law. This agreement will be governed by and
      construed in accordance with the laws of the State of New York, without regard
      to its conflicts of laws principles. This agreement may be executed in
      counterparts, each of which shall be deemed an original, but all of which
      together shall constitute one and the same instrument. 


    
      
        
        

      

      
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         Would
      you kindly evidence your acceptance of the Option and your agreement to comply
      with the provisions hereof by executing this agreement in the space provided
      below. 

    
      


      
        	
                 

              	
                Very
                  truly yours,

                 

                NATIONAL
                  HOLDINGS CORPORATION  

              
	 	 
	
                 

              	
                By:  

              	
                /S/
                  CHRISTOPHER C. DEWEY  

              
	
                 

              	
                 

              	
                Authorized
                  Representative   

              


      

      


      
        	
                 

              
	
                AGREED
                  TO AND ACCEPTED:

              
	 
	
                /S/
                  MARK GOLDWASSER

              	 
	
                Mark
                  Goldwasser

              	 


      

    


    
      
        
        

      

      
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    EXHIBIT
      1 

    NATIONAL
      HOLDING CORPORATION

    120
      Broadway, 27th
      Floor

    New
      York,
      NY 10271

    


    Gentlemen:
      

    


         Notice
      is hereby given of my election to purchase ____________ shares of Common Stock,
      $.02 par value (the “Shares”), of National Holdings Corporation, at a price of
      $_________ per Share, pursuant to the provisions of the stock option granted
      to
      me on July 1, 2008. Enclosed in payment for the Shares is: 

    


    
      	
            	o	
              my
                check in the amount of $______. 

            


    

     

    
      	
            	o	
              ______
                Shares having a total value of $________, such value being based
                on the
                Fair Market Value of the Shares on the date of exercise.
                

            


    

    


         The
      following information is supplied for use in issuing and registering the Shares
      purchased hereby: 

    
      	
               

            	
               

            	
               

            
	
              Number
                of Certificates

                   and
                Denominations 

            	
               

            	
               

            
	
               

            	 	 
	
              Name
                

            	
               

            	
               

            
	
               

            	 	 
	
              Address
                

            	
               

            	
               

            
	 	 	 
	
               

            	 	 

	 	 	 
	
               
                

            	
               

            	
               
                

            
	
               

            	 	 
	
              Social
                Security No. 

            	
               

            	
               

            


    

    Dated:
      

    


    
      	
               

            	
              Very
                truly yours,

            
	 	 
	 	 

	 	
              Mark
                Goldwasser

            


    

    


    
      
        
        

      

      
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